Amana FS Market News

China's Unwillingness to Tackle Reform Head-On

China's economic targets for this year imply an unwillingness to tackle reforms head-on, not to mention a blithe disrespect for credibility. The GDP growth target was unchanged from last year, at "around 6.5%", though the phrase "or higher if practically possible" was dropped.

Setting the same target, despite substantially higher interest rates and a clear intensification of financial regulatory enforcement, beggars economic belief. On the face of it, an unchanged growth target also jars with the reduction in the fiscal deficit target to 2.6% of GDP this year, from 3.0% last year. A smaller deficit, in the context of the IMF's estimated augmented deficit of 12.6% of GDP last year, is farcical. It demonstrates that the authorities have no intention of bringing off-balance sheet items out of the shadows. But we see a silver lining.

We reckon the authorities are anticipating economies of scale from fiscal reforms to centralize borrowing and spending efforts. In addition, we can't see how the authorities can achieve a deficit reduction, whilst cutting enterprise and individual taxes, without also finally rolling out a necessary property tax.

FOMC to Raise Fed Funds Rate by 25bps on Wednesday

We expect the FOMC to raise rates by 25 basis point, but to repeat that it still expects only a "gradual" tightening given "balanced" risks. The growth forecasts in the SEP likely will be raised, but we expect FOMC members to stick with their median forecasts of three hikes both this year and next.

Also, we expect Chair Powell to sound bullish on growth but not unduly bearish on inflation risks, though he likely will highlight the impending adverse base effects, which will lift the year-over-year rates sharply over the next few months.

Looking ahead, markets just don't know what the long-term outcome will be. But we think that the chance of a significant and sustained increase in male participation is quite high, so unemployment for the next two years are not as low as payroll would imply, assuming unchanged participation. That's why markets have four rate hikes in their forecast for this year and three next year, rather than four and six, which is what will happen—at least—if participation remains flat.

Bitcoin prices recover despite rumours of crypto ad-ban by Twitter, the third of its kind after Facebook and Google

All major cryptocurrencies trading in green following recovery in demand

Ethereum, Ripple, and Litecoin trade nearly 1-5% higher

BTC/USD (Bitcoin): Bitcoin prices remained on the upside during European session Monday, as demand recovered among investors despite rumors of an advertisement ban by Twitter after similar such initiative by Facebook and Google. At 09:55GMT, it was trading nearly 7% higher at $8,204.30 on the Bitstamp exchange.

Technical Analysis Overview: Bitcoin prices are caught between the immediate resistance level (8,583.72) and the immediate support at 7,227.64. The market is short-term bullish, but as long as the price trades below the trend-defining level at 9,382.82 we assume that the price will roll over and target the next support level at 6,592.68. Beyond that, 5,958.70 is the next support level.

ETH/USD (Ethereum): The world’s second-largest cryptocurrency in terms of market cap, Ethereum, followed the footsteps of its wider peer, surging over 3% at the start of the week Monday, following renewed demand despite news of Twitter considering to ban crypto ads after similar such move announced by Google last week and by Facebook even prior to that. At 10:00GMT, it was trading nearly 3% higher at $527.39.

Technical Analysis Overview: Ethereum is also on an upward spree, trapped between the immediate resistance level at 563.79 and immediate support at 452.08. If the market moves further upside, Ethereum prices could target 627.59 as the next resistance level and the trend-defining level at 706.42 beyond that.

XRP/USD (Ripple): The third most popular cryptocurrency, Ripple followed the crowd as well, climbing along with its counterparts, as investors have largely shrugged-off the Twitter ad-ban news and earlier negative comments from Allianz Global Investors. Market participants have also overcome the losses seen after Google’s similar decision. At 10:05GMT, it was trading 5.32% higher at $0.63571.

Technical Analysis Overview: Similar to its peers, Ripple is also surging, with eyes on the immediate resistance at 0.70637. If the trend reverses, the immediate support could be seen at 0.53626. If the immediate resistance level is breached, the trend-defining level of 0.79458 would act as the next resistance and 0.83734 and 0.88451 after that.

BCH/USD (Bitcoin Cash): The bitcoin cash also went with the flow, although recovering tad slower in comparison to its counterparts, following an upward movement in all its peers, tracking improved demand as investors defied news of Twitter planning to ban all crypto and ICO ads. At 10:10GMT, it was trading 1.50% higher at $910.72.

Technical Analysis Overview: Bitcoin Cash has recovered relatively lesser, now eyeing the immediate resistance level at 1,060.88. The support levels are possibly seen at 843.63 and 760.00 respectively if market movement turns bearish.

LTC/USD (Litecoin): Flowing with the current, Litecoin, the fifth best digital currency, by market cap, also rose as investors turned bullish despite concerns over rumors that Twitter is planning to ban all crypto-related ads. At 10:20GMT, it was trading 4.30% higher at $152.75.

Technical Analysis Overview: Litecoin is trading far below its trend-defining level at 152.72, up over 4% and is moving closer to its immediate resistance at 172.29. If investors turn further bullish in any case, the next resistance could be targeted at 193.40 (trend-defining level), followed by 205.69. However, in an unprecedented bearish movement, the possible support levels are seen at 137.2, 120.00 and 104.24 respectively.

The Bank of Japan in its March monetary policy meeting’s summary-of-opinions noted that considering there is still a long way to go to achieve the price stability target of 2%, it is appropriate to pursue powerful monetary easing with persistence under the current guideline for market operations in order to firmly maintain the momentum toward achieving the price stability target.

The central bank said there is no change in the judgment that it is necessary to continue pursuing powerful monetary easing with persistence so that highly accommodative financial conditions are maintained. The Bank should continue with the current monetary policy with the aim of persistently encouraging the virtuous cycle to take hold and achieving the price stability target. The Bank should aim to achieve the price stability target while gaining consensus among the public on the importance of overcoming deflation.

Amid the inflation rate increasing toward 2 percent and the potential growth rate rising going forward, the effects of monetary easing measures will be enhanced. It will be necessary to consider appropriate policy conduct while taking into account such changes in the environment as well as the side effects of the measures, the BoJ noted.

The markets will now look ahead to the national CPI data, scheduled to be released on Friday, but before that FOMC rate hike decision on Wednesday will be a key event worldwide. We expect a 25 basis points hike, taking the fed funds rate to 1.50-1.75%.

Technical Analysis Overview: The USD/JPY pair is trading mid-way between the immediate resistance level at 106.414 and immediate support at 105.641, up 0.09% to 106.11. If market further bullish, the next resistance can be seen at 107.311 (trend-defining level) and 107.540 and 107.869 beyond that. Meanwhile, the immediate support is seen at 105.641 and 105.289 beyond that, if market turns bearish.

United Kingdom Rightmove House Price Index Rises 1.5 Pct M/M in February

The United Kingdom Rightmove house price index rose 1.5% m/m in February, up from 0.8% m/m growth seen in January. Demand for housing remains resilient, with an active start to 2018. Indeed, the number of monthly visits to Rightmove in January is at its highest ever level, at over 141 million.

According to the press release, this has helped to fuel a degree of cautious optimism among new-to-the-market sellers in most regions of the UK, with average asking prices up by 0.8% (GBP2,414) this month.

All regions but one have seen the price of newly-marketed property increase this month, with the South West being a very marginal exception with a fall of just GBP131. However, the annual rate of increase remains subdued at just 1.5%, dragged down to a degree by London’s year-on-year fall of -1.0%. But despite buyers’ price-sensitivity, home-hunter visits to Rightmove have hit a record high.

There are signs that the increased home-hunter activity is fuelling a recovery in the number of sales agreed, which in Q4 of 2017 were running at an average drop of -5.5% compared to the prior year. Taking the first full month of 2018 as a snapshot, sales agreed numbers in January have now recovered to -1.6% down compared to a year ago.

Again there are marked local market differences, but Rightmove analysis of properties that have been newly listed since October 2017 and have been marked as sale agreed reveals that six out of the top ten fastest selling locations are in either the East or West Midlands. However, top of the quick-to-sell league is Livingston in Scotland, selling at an average of only 17 days, for those properties that have been newly listed since October 2017 and have sold.

The US dollar and Japanese yen opened a little firmer at the start of the new business week in Europe, though off their earlier Asian highs with the former supported by an expected 25 basis points rate hike at the conclusion of the 2-day Fed meeting on Wednesday, whilst the JPY is seen supported by a rise in market risk aversion as worries over global trade and protectionism persist.

With a quiet start to the week data-wise in both Europe and North America traders are expecting more tight, range trading currency action today with a slight greenback upside bias.

Meanwhile the US dollar index is trading close to last Friday's 2.5-week high at 90.37, currently at 90.29, with resistance noted at 90.35 ahead of 90.90 (1 March high) with support at 90.00 (psychological and 50-day ma) ahead of 90.85 (Friday's low).

Technical Analysis Overview: The USD/JPY pair is currently trading just above the immediate support level of 105.641, breaking of that level will lead the pair to move towards next support of 105.289. On the other hand, if the USD/JPY shows bullish tinge, the pair could move to the immediate resistance level of 106.414 and next 107.311, which is also a trend-defining level. Looking at the Fed's interest rate hike expectations, investors could target 106.414 in the short-term.

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